As previously reported, treatment with DM-199 exhibited a 313% (p <0.0001) increase in glucose disposal in a SD animal hyperinsulinemic euglycemic clamp model. The Company now reports that treatment with DM-199 in a three-week study of ZDF animal demonstrated expected improvement in glucose control. In addition, there was a positive robust control of blood pressure. Specifically, a low dose of DM-199 therapy lead to a 1.6% improvement in HbA1c, and a 20 mm/Hg (p=0.008) lower mean systolic blood pressure compared to untreated animals. Numerically, DM-199 outperformed Exanatide® and Sidagliptin® in both measurements, but did not achieve statistical significance. Additional studies powered to compare DM-199 to these agents are on going.

"These results clearly support the development of DM-199 as a clinical Type 2 diabetes therapy," stated Rick Pauls, CEO of DiaMedica, "in that it appears DM-199 may not only control blood glucose, but also have a very positive effect on blood pressure as well. High blood pressure increases the risk of heart disease (heart attack), stroke, and kidney disease complications in Type 2 diabetics."

DM-199 featuring a Glucose-Plus Profile

Ideally, next generation Type 2 diabetes therapeutics will provide glucose control plusadditional benefits to control Type 2 diabetes complications and co-morbidities, termed "glucose-plus". DiaMedica believes DM-199 potentially offers one of the most comprehensive "glucose-plus" profiles of any of the products currently on the market or in development. Animal studies to date show superior glucose control through what the Company believes to be an insulin sensitivity and insulin secretion mechanism. In addition, results to date indicate a positive profile for blood pressure and heart rate DM-199 has been shown to significantly reduce inflammation in animal models. Recently, DM-199 has been co-administered with long acting insulin showing a statistically significant effect in the absence of hypoglycemia (results to be published).

"While the animal studies need to be confirmed in human trials, we believe DM-199 is well positioned to be developed as a Type 2 therapeutic with its glucose-plus features. DiaMedica is now moving forward with its human clinical for Type 2 diabetes in early 2013," stated Rick Pauls, Chairman & CEO of DiaMedica.

About DiaMedica

DiaMedica Inc. is a publicly traded (TSX VENTURE:DMA) biopharmaceutical company focused on the discovery and development of novel therapies to treat diabetes and the complications associated with diabetes. DiaMedica's lead compound, DM-199, is a recombinant human protein that represents a novel approach to treating Type 1 and Type 2 diabetes. Based on the Company's understanding of the postprandial state, DiaMedica is also developing a novel monoclonal antibody, DM-204 for the treatment of Type 2 diabetes. Chronic treatment with DM-204 in a pre-clinical Type 2 diabetes model resulted in a significant improvement in blood glucose control as measured by HbA1c and also significant improved blood pressure and serum cholesterol levels.

The Company is listed on the TSX Venture Exchange in Canada under the trading symbol 'DMA'.

FORWARD-LOOKING STATEMENTS

The statements made in this press release that are not historical facts contain forward-looking information that involves risk and uncertainties. All statements, other than statements of historical facts, which address DiaMedica's expectations, should be considered forward-looking statements. Such statements are based on management's exercise of business judgment as well as assumptions made by and information currently available to management. When used in this document, the words "may", "will", "anticipate", "believe", "estimate", "expect", "intend" and words of similar import, are intended to identify any forward-looking statements. You should not place undue reliance on these forward-looking statements. These statements reflect a current view of future events and are subject to certain risks and uncertainties as contained in the Corporation's filings with Canadian securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results could differ materially from those anticipated in these forward-looking statements. The Corporation undertakes no obligation, and does not intend, to update, revise or otherwise publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof, or to reflect the occurrence of any unanticipated events. Although management believes that expectations are based on reasonable assumptions, no assurance can be given that these expectations will materialize.